Opinion
No. 35556-6-II.
February 5, 2008.
Appeal from a judgment of the Superior Court for Clark County, No. 06-2-02694-6, Barbara D. Johnson, J., entered October 23, 2006.
Affirmed by unpublished opinion per Van Deren, A.C.J., concurred in by Armstrong and Quinn-Brintnall, JJ.
William and Randall Holdner, doing business as Holdner Farms (the Holdners), appeal the trial court's order granting summary judgment to the Port of Vancouver in the Port's unlawful detainer action. The unlawful detainer action was based on the Port's early termination of a lease between the parties. The Holdners argue that the lease terms were ambiguous and that the trial court erred in granting summary judgment because several issues of material fact remain. We affirm.
FACTS
I. The Holdners' Lease
On November 26, 1997, the Port leased approximately 543 acres, "commonly known as: Parcel 4 and Parcel 5 of Columbia Gateway," to the Holdners for agricultural and farming purposes. Clerk's Papers (CP) at 23. The initial term of the lease was for ten years and the Holdners had the opportunity to renew the lease for ten additional one-year periods following the initial term. The lease was subject to an early termination provision by the Port and it also stated that the Port "intends eventual use of the property to be consistent with its light industrial/industrial park zoning, but such use is not anticipated for many years." CP at 8. In particular, paragraph 12 provided access to the Port for inspection and paragraph 15 provided for early termination of the lease by the Port if it needed the property for industrial development or other Port activities.
Paragraphs 12 and 15 stated:
12. INSPECTION: It shall be lawful for the PORT and/or the PORT's servants agents and employees to enter into or upon the leased premises at any reasonable time for the purpose of examining the condition thereof and the performance by [the Holdners] of the terms and provisions of this agreement.
. . . .
15. EARLY TERMINATION BY THE PORT: It is understood and agreed that this Lease may be terminated by the PORT at any time the PORT needs said premises to carry on its industrial development or other PORT activities. The PORT shall give at least ninety (90) days written notice to the [Holdners] of its intention to terminate said Lease and in addition, shall give the [Holdners] an opportunity to remove all of its growing crops or in lieu thereof, the PORT shall pay the [Holdners] the value of said crops which cannot be harvested by reason of the early termination of said Lease.
CP at 14-15.
II. Columbia Gateway Development and Mitigation Parcels
In 1994, the Columbia River Alliance for Nurturing the Environment (CRANE) sued the Port over its Columbia Gateway project. In October 2003, six years after the Port leased parcels 4 and 5 to the Holdners, the Port settled the lawsuit with CRANE. As part of the settlement, the Port agreed to record covenants against parcels 4 and 5 that restrict development and provide only for "mitigation and enhancement of habitat and the water well field" on those parcels. CP at 169.
The Columbia Gateway is an economic development and conservation plan developed by the Port of Vancouver, Washington. The Port plans to use approximately 450 acres of land for development, which will spur job growth. As part of the plan, the Port will use certain areas for conservation and environmental purposes. The Columbia Gateway is located west of the Port's current operations. See Port of Vancouver, Economic Development Conservation Plan, http://www.portvanusa.com/property/columbiagateway.html (last visited January 15, 2007).
In addition, the Port agreed that any development of parcel 3 required it to first maximize "wildlife habitat that . . . will attract and support Sandhill Cranes, raptors, and other wildlife that presently exist on and/or use Parcels 3, 4 and 5 together" on parcels 4 and 5. CP at 170. CRANE was responsible for investigating the wildlife habitat and determining what would be necessary for its development, but to accomplish this, the Port agreed that it may have to excavate and grade parcels 4 and 5, improve soils, improve or establish wetlands, or plant trees, shrubs, grasses, crops and other plant life.
The Port also agreed that "no development shall occur on Parcel 3 (save and except for the placement of fill material on the Parcel 3 Disposal Site) unless and until the FEIS [(Final Environmental Impact Statement)] is adopted by the City of Vancouver, and until the [wildlife habitat] has been completed on [parcels 4 and 5]." CP at 175. In addition, CRANE had the right to approve or disapprove statements made in the FEIS.
The Port Board of Commissioners (Commissioners) developed and considered various plans for the development and mitigation of parcels 3, 4, and 5. On December 9, 2003, after reviewing public comment, the Commissioners voted to pursue "Alternative 2," which consisted of "[m]arine oriented development on 504 acres of Parcel 3 combined with mitigation on Parcels 4 and 5." CP at 240, 239.
As a result of the CRANE lawsuit, the Port was required to conduct analyses under the State Environmental Policy Act (SEPA), chapter 43.21C RCW, on many of the parcels of land comprising the Columbia Gateway, including parcels 3, 4, and 5. The SEPA analysis began with an Environmental Impact Statement (EIS) in 1999. The Port provided the draft EIS to the public in 2002. In conjunction with drafting the FEIS, and after public comment, the Commissioners voted to pursue alternative 2.
III. Monitoring Wells and Lease Termination
As part of the mitigation process in 2006, the Port sought to obtain hydrology information about the Holdners' leased property by installing fourteen monitoring wells on parcels 4 and 5 that were "two inches in diameter and [would] extend 15 to 20 feet below the ground." CP at 6. After installation, they needed monitoring approximately twice a week. Previously, the Holdners had allowed the Port on the property to conduct studies in furtherance of the Port's mitigation goals. But after the Port met with William Holdner on May 5, 2006, the Holdners refused to allow the Port to place monitoring wells on the property.
On May 12, 2006, under paragraph 15 of the lease, the Port sent the Holdners a letter terminating the lease early and providing them with 90 days' notice before the lease termination date of August 15, 2006. The Port reasoned that "[a]s a result of [the Holdners'] refusal to allow the Port to install the monitoring wells on the Holdner Farms Leasehold and the Port's need to continue with the installation of the monitoring wells as part of its development of Columbia Gateway," it was necessary to terminate the lease. CP at 23. The Port also made arrangements for the payment or removal of the Holdners' crops in accord with paragraph 15.
IV. Litigation Concerning Lease Termination and Property Possession
The Holdners sued the Port, alleging that there was a dispute over the Port's ability to terminate the lease early and seeking damages. On June 7, 2006, the Port sought a preliminary injunction to enjoin the Holdners "from denying the Port access to the leased property to install, maintain and monitor fourteen (14) groundwater monitoring wells," under the inspection provision of the lease, paragraph 12. CP at 26. Shane Latimer, a senior ecologist employed by the firm providing environmental and natural resources consultation to the Port, filed a declaration stating: "It is imperative that the groundwater wells be installed in June [2006] so as to capture the season fluctuation between wet and dry seasons. If the wells are not installed this month, we will have to wait an entire year to gather the information that is uniquely available in June." CP at 51. The trial court denied the preliminary injunction on July 7.
Clark County Superior Court cause number 06-2-02694-6.
The Holdners offered to allow the Port access for well installation and monitoring in exchange for payment of more than one-year's rent. The Port refused. When the Holdners did not vacate the leased premises by August 15, as required by the Port's termination letter, the Port filed an unlawful detainer action against them. The Holdners raised various affirmative defenses, alleging disturbance of their right to quiet enjoyment of their leased property, the Port's unclean hands, and that the Port's unlawful detainer action was in retaliation for the Holdners' "exercise of statutory and constitutional rights." CP at 369.
The Holdners pay $1,800, per month in rent, approximately $21,600 per year.
Clark County Superior Court cause number 06-2-04327-1.
The Port successfully moved for summary judgment and the trial court determined that "environmental mitigation [was] a significant part of the [development] process," that placing the 14 monitoring wells on the property "was a significant step in the procedure in order to pursue the overall development plan," and, thus, that the Port showed a sufficient need to terminate the lease under paragraph 15 and it was acting within its rights. Report of Proceedings (RP) at 73, 74. In addition, the trial court found that there was no "basis to determine that there is an argument for retaliation" or unclean hands, two affirmative defenses the Holdners raised. RP at 75. In addition to granting summary judgment, the trial court dismissed all other claims, affirmative defenses, and counterclaims raised in the consolidated cases concerning the possession of the property, and issued a writ of restitution immediately restoring possession of parcels 4 and 5 to the Port.
Cause numbers 06-2-02694-6 and 06-2-04327-1 were consolidated on August 25, 2006.
The trial court reserved "jurisdiction to decide the issue of Holdner Farms' damages under the Lease." CP at 331.
The Holdners appeal.
ANALYSIS
The Holdners argue that the trial court erred in granting summary judgment and holding it was unlawfully detaining the leased property. They contend that the lease terms were ambiguous and that they presented issues of material fact about whether the Port was entitled to terminate their lease under paragraph 15.
I. Standard of Review
"We review summary judgment de novo, taking all facts in the light most favorable to the nonmoving party." Herring v. Texaco, Inc., 161 Wn.2d 189, 194, 165 P.3d 4 (2007). Summary judgment is appropriate only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." CR 56(c). The trial court's grant of summary judgment is proper if "reasonable minds could reach only one conclusion from the evidence presented." Ballard Square Condo. Owners Ass'n v. Dynasty Const. Co., 158 Wn.2d 603, 609, 146 P.3d 914 (2006).
II. Lease Interpretation
The Holdners argue that the word "need" in paragraph 15 of the lease is undefined and that we should use the word's dictionary definition to interpret the contract. Br. of Appellants at 18. We agree. Here, paragraph 15 required the Port to show a need to use the property for light industrial development or other Port activities in order to terminate the lease early.
A lease is a contract and we will interpret it by using the rules of contract interpretation. Cochran v. Lakota Land Water Co., 171 Wash. 155, 163, 17 P.2d 861 (1933); Seattle-First Nat'l Bank v. Westlake Park Assocs., 42 Wn. App. 269, 272, 711 P.2d 361 (1985). "The goal of contract interpretation is to carry out the intent of the parties as manifested, if possible, by the parties' own contract language." Dep't of Corrections v. Fluor Daniel, Inc., 160 Wn.2d 786, 795, 161 P.3d 372 (2007).
But we interpret the contract as a whole and will not read ambiguity into an unambiguous contract. Berg v. Hudesman, 115 Wn.2d 657, 669, 801 P.2d 222 (1990); Syrovy v. Alpine Res., Inc., 122 Wn.2d 544, 551, 859 P.2d 51 (1993). "We interpret unambiguous contracts as a matter of law." Paradiso v. Drake, 135 Wn. App. 329, 334, 143 P.3d 859 (2006), review denied, 160 Wn.2d 1024 (2007). "Under Berg, interpretation of a contract provision is a question of law only when (1) the interpretation does not depend on the use of extrinsic evidence or (2) only one reasonable inference can be drawn from the extrinsic evidence." Scott Galvanizing, Inc. v. Northwest EnviroServices, Inc., 120 Wn.2d 573, 582, 844 P.2d 428 (1993).
We give undefined terms "their 'plain, ordinary, and popular' meaning." Boeing Co. v. Aetna Cas. and Sur. Co., 113 Wn.2d 869, 877, 784 P.2d 507 (1990) (quoting Farmers Ins. Co. v. Miller, 87 Wn.2d 70, 73, 549 P.2d 9 (1976)). The term "need" was not defined in the contract and, thus, we may ascertain its ordinary meaning by reference to a dictionary. Boeing Co., 113 Wn.2d at 877. The word "need" has many definitions. The most relevant are "necessary duty: OBLIGATION," "a want of something requisite, desirable or useful," "to be in want," and "to be needful: be necessary." Webster's Third New International Dictionary 1512 (2002). The plain meaning of the word need is unambiguous and the trial court did not err in deciding this matter on summary judgment.
III. Issues of Material Fact
The Holdners argue that they raised issues of material fact in response to the Port's motion for summary judgment in the unlawful detainer action and, therefore, the trial court erred in granting the motion. The moving party bears the burden of demonstrating that there is no genuine issue of material fact. Atherton Condo. Apartment-Owners Ass'n Bd. of Dirs. v. Blume Dev. Co., 115 Wn.2d 506, 516, 799 P.2d 250 (1990). "If the moving party satisfies its burden, the nonmoving party must present evidence that demonstrates that material facts are in dispute." Atherton, 115 Wn.2d at 516. But the Holdners, as the nonmoving party, could "not rely on speculation, argumentative assertions that unresolved factual issues remain, or in having its affidavits considered at face value." Seven Gables Corp. v. MGM/UA Entm't Co., 106 Wn.2d 1, 13, 721 P.2d 1 (1986)). The trial court properly grants summary judgment if the nonmoving party fails to satisfy its burden. Atherton, 115 Wn.2d at 516.
A. The Port's Need
The Holdners argue that the Port did not need to place the monitoring wells on the property or, at least, did not need to place the monitoring wells on the property when the Port terminated the contract. They also argue that a material issue of fact exists about whether the Port could evict the Holdners to obtain mere access to the property to sink the wells.
Here, we are satisfied that the trial court properly concluded that the Port demonstrated that it had a need to place and monitor wells on parcels 4 and 5 in compliance with the settlement it reached with CRANE. The placement of the wells would allow it to go forward with its plans for Columbia Gateway that allow development and economic growth spurred by Port activities on parcels 3, 4, and 5. The trial court had before it Latimer's unrefuted declaration that "[i]n order to properly plan for appropriate environmental mitigation, it is necessary to accurately assess the hydrology" of parcels 4 and 5, and the "most efficient and least intrusive means of determining the groundwater status is to install and monitor groundwater monitoring wells on the Property." CP at 51. The evidence also showed that the failure to gain access to parcels 4 and 5 and sink the wells by June 2006 caused the Port to miss a year's worth of hydrology monitoring data, delaying the wetland construction.
Furthermore, before 2006, the Holdners had cooperated with the Port, allowing it to conduct studies on the Port's mitigation goals and, thus, the Port had no need to terminate the lease in furtherance of its mitigation goals. But in 2006, because the Holdners would not allow the Port to sink the monitoring wells, or to monitor them, and because paragraph 12 of the lease did not give the Port inspection rights to sink or monitor the wells on the property, the Port's need for the property under the lease gave it the right to terminate the lease.
In May 2005, the Port notified the Holdners that it likely would terminate the lease in June 2007 because of the mitigation work it was pursuing. This would have been near the end of the ten-year lease term.
Additionally, the Holdners argue that sinking the wells was not a necessity because the Port was pursuing a preferred alternative for the Columbia Gateway, meaning that the Port had other options besides placing the monitoring wells on the property. But although the Port did consider various options for land development to comply with the CRANE settlement, the Commissioners ultimately directed the above course of action. Accordingly, the Port needed to place the monitoring wells on parcels 4 and 5.
Finally, the Holdners argue that the Port did not need to terminate their lease because it could have negotiated with them for access. No lease provision requires the Port to negotiate with the Holdners if the Port needs the property for Port activities. The lease clearly provides that if the Port needs the property for Port activities, it may terminate the lease. Reasonable minds could reach only one conclusion from the evidence presented — the Port needed the property to sink the wells to develop Columbia Gateway and, under paragraph 15 of the lease, the Port could properly terminate the lease. See Ballard Square Condo. Owners Ass'n, 158 Wn.2d at 609. The trial court did not err in finding that the Port needed parcels 4 and 5 and that it could terminate the lease in 2006 under paragraph 15.
B. Retaliatory Eviction
The Holdners also contend that the trial court erred in granting summary judgment because they raised an issue of material fact concerning their affirmative defense of retaliation. They first argue that the word "inspection" in paragraph 12 was ambiguous and when they sought to enforce their right to prevent the Port from installing the wells under paragraph 12, the Port retaliated by terminating the lease. Br. of Appellants at 14. They argue that, after the trial court denied the Port's motion for a preliminary injunction, the Port sued for unlawful detainer instead of negotiating access; i.e., "the Port acted on the lease in retaliation." Br. of Appellants at 17.
The Port argues that we should dismiss the Holdners' argument because the Holdners never argued that "it was illegal or improper retaliation for the Port to invoke its contract rights to terminate the Lease in response to the Holdners' invocation of their contract rights to prevent the Port from entering the Property," only that the Port's actions were based on the Holdners' invocation of their constitutional rights. Br. of Resp't at 25. But the Holdners argued that the eviction was retaliation violating their due process rights, constitutional eminent domain provisions, and their implied contract right of quiet enjoyment. The Holdners also argued that instead of negotiating to gain access, the Port terminated the lease. Although perhaps ineloquent, the Holdners sufficiently raised the issue at the trial court.
The Port does not challenge the trial court's denial of its motion for a preliminary injunction on appeal.
To support their argument, the Holdners rely on Port of Longview v. Int'l Raw Materials, Ltd., in which we held "that a commercial tenant of a government landlord may, in some circumstances, assert its right to free speech as an equitable affirmative defense in the unlawful detainer action." 96 Wn. App. 431, 444, 979 P.2d 917 (1999).
The Port responds that:
There is certainly no language in the Port of Longview decision to indicate that its holding would reach situations where constitutional rights were not being exercised by the tenant and where the landlord merely exercised its own contract rights in a legal manner in response to the tenant's exercise of its contract rights.
Br. of Resp't at 27. But we need not decide whether the affirmative defense applies in this case.
Treatises examine the breadth of the Port of Longview differently. Compare Milton R. Friedman and Patrick A. Randolph, Jr., Friedman on Leases § 14:7, at 94-100 (4th ed. 2004) ("There is at least the suggestion of the concept of 'tenant's free speech,' at least in the context of disputes with the landlord."), with 17 William B. Stoebuck and John W. Weaver, Washington Practice: Real Estate: Property Law § 6.80, at 447 (2d ed. 2004) ("[I]n Washington there is no doubt that [retaliatory eviction] defenses are allowed in unlawful detainer actions arising out of non-residential leases.").
Even if we were to assume that the Holdners were entitled to the affirmative defense, no issue of material fact remains. "A crucial premise underlying the 'retaliatory eviction' doctrine and the tenant's right to raise the issue in an unlawful detainer proceeding is that, but for the landlord's 'invalid reason' for the eviction, the tenant would be entitled to remain in possession of the premises pursuant to the underlying lease or rental agreement." Cal. Livestock Prod. Credit Ass'n v. Sutfin, 165 Cal. App. 3d 136, 143, 211 Cal. Rptr. 152 (1985).
The lease is unambiguous. The Port validly could terminate it if it needed the property. We have already held that the Port demonstrated its need and that no issues of material fact exist on that issue. Because the Port, as the moving party, satisfied its burden to show that there was no issue of material fact, the Holdners were required to "present evidence that demonstrates that material facts are in dispute," Atherton, 115 Wn.2d at 516, without relying "on speculation, argumentative assertions that unresolved factual issues remain, or in having its affidavits considered at face value." Seven Gables, 106 Wn.2d at 13. The Holdners have presented only argument, not evidence of retaliation and, in light of the Port's demonstrated need for the property, summary judgment was proper. See Atherton, 115 Wn.2d at 516; Seven Gables, 106 Wn.2d at 13.
C. Commercially Reasonable Lease Terms
Next, the Holdners argue that it was commercially unreasonable to provide the Holdners with only 90 days to vacate the property. They rely on Wilson Court Ltd. P'ship v. Tony Maroni's, Inc., 134 Wn.2d 692, 705-06, 952 P.2d 590 (1998), for the premise that business contract terms "must be interpreted consistent with the commercial purposes underlying them." Br. of Appellants at 22.
But in Wilson Court, the court faced an ambiguous contract provision that it interpreted in a commercially reasonable manner to resolve the ambiguity. Wilson Court, 134 Wn.2d at 705-06. Here the Holdners argue that the phrase "at least 90 days" is ambiguous, but we find no ambiguity. Reply Br. of Appellants at 8. The contract clearly states that the Port "shall give at least ninety (90) days written notice to the [Holdners] of its intention to terminate said Lease." CP at 15. We will not read ambiguity into an unambiguous contract. See Berg, 115 Wn.2d at 669; Syrovy, 122 Wn.2d at 551. The phrase "at least 90 days" is clear — it provides a minimum time frame for eviction. CP at 15.
The Holdners also argue that it is "patently commercially unreasonable" to expect agricultural leaseholders to vacate the land in 90 days because they could not possibly accomplish everything that was necessary to move their business in such a short time. Br. of Appellants at 24. But when the Holdners negotiated the lease, they knew that it provided that they might have to vacate the property in a minimum of 90 days if the Port invoked paragraph 15 of the lease. No evidence suggests that the Holdners were not fully capable of negotiating a different amount of time in the lease.
Furthermore, paragraph 15 of the lease provides that the Port "shall pay the [Holdners] the value of the said crops which cannot be harvested by reason of the early termination of said Lease." CP at 15. "It is black letter law of contracts that the parties to a contract shall be bound by its terms." Adler v. Fred Lind Manor, 153 Wn.2d 331, 344, 103 P.3d 773 (2004). Accordingly, we hold that, in this case, the Holdners are bound by the unambiguous terms of the contract and the lease was commercially reasonable.
D. Good Faith
Finally, the Holdners contend that the Port violated its covenant to act in good faith by failing to negotiate with them for different access terms and, thus, summary judgment was improper. The Holdners rely on Badgett v. Sec. State Bank, 116 Wn.2d 563, 807 P.2d 356(1991) to support this claim. Badgett recognizes that every contract contains "an implied duty of good faith and fair dealing. This duty obligates the parties to cooperate with each other so that each may obtain the full benefit of performance." 116 Wn.2d at 569.
The Holdners noted the covenant of good faith and fair dealing in their appellant brief but they cited it in conjunction with their arguments on retaliation and commercial reasonableness. At oral argument, the Holdners' counsel focused on this issue and thus, we address it.
The Holdners argue that the Port had a duty to negotiate with them to place, and to compensate them for placing, the wells on their leased property so that they could obtain the full benefit of their 10-year lease. But "the duty of good faith does not extend to obligate a party to accept a material change in the terms of its contract." Badgett, 116 Wn.2d at 569. The lease does not require the Port to negotiate with the Holdners if it needs the property for Port activities. To the contrary, the unambiguous early termination provision allowed the Port to terminate the lease if it needed the property. Thus, the Holdners' argument fails.
We affirm the trial court's ruling on summary judgment.
Only the Holdners argue that they are entitled to attorney fees and costs on appeal because the Port's termination of the lease breached its terms and because the Port acted in bad faith. The Port refutes the Holdners' claims but does not seek attorney fees. Because we affirm the trial court's ruling in favor of the Port, we do not address the Holdners' attorney fee arguments.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
Armstrong, J., Quinn-Brintnall, J., concur.